Glen Burnie Bancorp Announces Year and Fourth Quarter 2017 Results

GlobeNewswire 15-Feb-2018 11:50 AM

GLEN BURNIE, Md., Feb. 15, 2018 (GLOBE NEWSWIRE) -- Glen Burnie Bancorp (Bancorp) (NASDAQ:GLBZ), the bank holding company for The Bank of Glen Burnie (Bank), announced today net income of $0.91 million, or $0.33 per basic and diluted common share for the year ended December 31, 2017, compared to $1.10 million, or $0.40 per basic and diluted common share for the year ended December 31, 2016.

For the fourth quarter ended December 31, 2017, Bancorp reported a net loss of $0.15 million, or $0.05 per basic and diluted common share, compared to net income of $0.40 million or $0.14 per basic and diluted common share for the fourth quarter of 2016.

The Tax Cuts and Jobs Act ("the Tax Act") was enacted on December 22, 2017, reducing the corporate federal income tax rate from 34% to 21% and making other changes to U.S. corporate income tax laws. Generally accepted accounting principles ("GAAP") require that the impact of the provisions of the Tax Act be accounted for in the period of enactment. Accordingly, the estimated incremental income tax expense recorded by the Bancorp in the fourth quarter of 2017 related to the Tax Act was $0.6 million, representing $0.21 of basic and diluted earnings per common share. The additional expense was largely attributable to the reduction in carrying value of net deferred tax assets reflecting lower future tax benefits resulting from the lower corporate tax rate. The enactment of the tax legislation is expected to reflect positively in our future results due to the lower federal income tax rate.

For the year ended December 31, 2017, net loans grew by $6.4 million, or 2% when compared to December 31, 2016. At December 31, 2017, Bancorp had total assets of $389.5 million. Bancorp, the oldest independent commercial bank in Anne Arundel County, will pay its 102nd consecutive quarterly dividend on February 23, 2018.

"We continue to make significant progress and believe we remain on track to achieve growth and earnings expectations as our outlook continues to improve across our business lines," said John D. Long, President and Chief Executive Officer. I am very proud to announce financial results for 2017 that highlight another successful year for the company. Growth in net interest income, credit costs significantly below our historical norms, and well controlled expenses led to a 79% rise in income before taxes for the year. Although fourth quarter and annual results were negatively impacted by the newly enacted tax legislation, a lower corporate tax rate in the future should provide many benefits to the company. Growing our lending business while increasing profitability continues to be a priority as we believe that our community bank delivery model offers an attractive option to borrowers. We also continue to make progress in expanding our lending platforms. Consumer indirect lending is a unique core competency for us that is based on the foundation of a consistent and disciplined underwriting process and an experienced management team. We remain deeply committed to serving the needs of the community through the development of new loan and deposit products designed to meet the financial needs in our community.

Highlights for the Quarter and Year ended December 31, 2017

Bancorp continued its organic growth strategy in the fourth quarter of 2017 driven by favorable net loan growth and supported by an improving 0.51% cost of funds. Bancorp has strong liquidity and capital positions that provide ample capacity for future growth, along with the Banks total regulatory capital to risk weighted assets of 13.84% at December 31, 2017.

Specific highlights include the following:

Return on average assets for the year ended December 31, 2017 was 0.23%, as compared to 0.28% for the year ended and December 31, 2016. Return on average equity for the year ended December 31, 2017 was 2.65%, as compared to 3.17% for the year ended December 31, 2016. Return on average assets for the quarter ended December 31, 2017 was -0.16%, as compared to 0.41% and 0.40% for the quarters ended September 30, 2017 and December 31, 2016, respectively. Return on average equity for the quarter ended December 31, 2017 was -1.75%, as compared to 4.74% and 4.55% for the quarter ended September 30, 2017 and December 31, 2016, respectively.

Total assets were $389.5 million at December 31, 2017, as compared to $389.9 million at September 30, 2017 and $388.4 million at December 31, 2016.

Total loans were $271.6 million at December 31, 2017, an increase of 0.04% from $271.5 million at September 30, 2017, and an increase of 2.45% from $265.1 million at December 31, 2016.

Total deposits were $334.2 at December 31, 2017, an increase of 0.03% from $334.1 million at September 30, 2017, and an increase of 0.30% from $333.2 million at December 31, 2016. Non-interest bearing deposits were $104.0 million at December 31, 2017, a decrease of 0.57% from $104.6 million at September 30, 2017, and an increase of 3.90% from $100.1 million at December 31, 2016.

Total borrowings were $20.0 million at December 31, 2017, unchanged from $20.0 million at September 30, 2017 and December 31, 2016.

Stockholders equity was $34.0 million at December 31, 2017, a decrease of $0.6 million from $34.6 million at September 30, 2017, and an increase of $0.2 million from $33.8 million at December 31, 2016. The decrease in the fourth quarter was related to lower corporate earnings which included the increased tax expense related to the revaluation of our deferred tax assets and liabilities upon enactment of the Tax Act, and the increase in other comprehensive income associated with the available for sale bond portfolio and interest rates swaps.

The book value per share of Bancorps common stock was $12.15 at December 31, 2017, compared to $12.38 per share at September 30, 2017, and $12.13 per share at December 31, 2016.

At December 31, 2017, the Bank remained above all well-capitalized regulatory requirement levels. The Banks tier 1 risk-based capital ratio was approximately 12.83% at December 31, 2017, as compared to 13.63% at September 30, 2017 and December 31, 2016. Liquidity remained strong due to managed cash and cash equivalents, borrowing lines with the FHLB of Atlanta, the Federal Reserve and correspondent banks, and the size and composition of the bond portfolio.

Net interest income for the year ended December 31, 2017 totaled $11.7 million, compared to $11.2 million for the year ended December 31, 2016. Net interest income for the three-month period ended December 31, 2017 totaled $3.0 million, compared to $2.9 million for the third quarter of 2017 and $2.8 million for the three-month period ended December 31, 2016.

Net interest margin for the year ended December 31, 2017 was 3.12%, compared to 2.98% for the year ended December 31, 2016. Net interest margin for the quarter ended December 31, 2017 was 3.20%, compared to 3.03% for the same periods of 2016. Earning asset leverage was the primary driver in year over year results, as the yield on interest earning assets increased 0.12% from 3.57% to 3.69% for the three month periods ended December 31, 2016 and December 31, 2017, respectively. The cost of funds decreased 0.06% from 0.57% to 0.51% for the same periods.

Nonperforming assets, which consist of nonaccrual loans, troubled debt restructurings, accruing loans past due 90 days or more, and other real estate owned, represented 0.94% of total assets at December 31, 2017, compared to 1.10% at September 30, 2017, and 1.06% at December 31, 2016.

The provision for loan losses for the quarter and year ended December 31, 2017 was $0.09 million and $0.3 million, respectively, compared to $0.6 million and $0.9 million, respectively, for the same periods of 2016. The decrease for the year ended December 31, 2017 was primarily the result of improved credit quality of the overall loan portfolio. As a result, the allowance for loan losses was $2.6 million at December 31, 2017, representing 0.95% of total loans, compared to $2.6 million, or 0.97% of total loans, at September 30, 2017, and $2.5 million, or 0.94% of total loans, at December 31, 2016.

Review of Financial Results

For the three-month periods ended December 31, 2017 and 2016

Net loss for the three-month period ended December 31, 2017 was $0.15 million, compared to net income of $0.41 million and $0.40 million for the three-month periods ended September 30, 2017 and December 31, 2016, respectively.

Net interest income for the three-month period ended December 31, 2017 totaled $3.0 million compared to $2.9 million for the previous quarter and $2.8 million for the fourth quarter of 2016. The increase in interest income primarily resulted from interest-earning asset growth from expansion of the Banks loan portfolio.

The provision for loan losses for the three-month period ended December 31, 2017 totaled $0.09 million compared to $0.08 million for the previous quarter and $0.64 million for the same period of 2016 resulting from the improving credit quality of the overall loan portfolio combined with the resolution of nonperforming loans.

Noninterest income for the three-month period ended December 31, 2017 was $0.35 million compared to $0.37 million and $0.64 million for the three-month periods ended September 30, 2017 and December 31, 2016, respectively. The results for the fourth quarter 2016 includes a $0.22 million gain on redemption of BOLI policy.

For the three-month period ended December 31, 2017, noninterest expense was $2.70 million, compared to $2.71 million and $2.55 for the three-month periods ended September 30, 2017 and December 31, 2016, respectively. The primary contributor to the $0.01 million decrease when compared to the third quarter of 2017 was a decrease in salaries and employee benefit expense, occupancy and equipment expense, loan collection costs and telephone costs, partially offset by an increase in legal and professional fees. The primary contributor to the $0.15 million increase when compared to the fourth quarter of 2016 was an increase in salaries and employee benefit expense, occupancy and equipment expenses and legal and professional fees, partially offset by a decrease in data processing services and loan collection costs.

For the twelve-month periods ended December 31, 2017 and 2016

Net income for the year ended December 31, 2017 was $0.91 million compared to net income of $1.10 million for the year ended December 31, 2016.

Net interest income for the year ended December 31, 2017 totaled $11.7 million, compared to $11.2 million for the same period of 2016. The increase in interest income resulted primarily from interest-earning asset growth in the loan portfolio.

The provision for loan losses for the year ended December 31, 2017 was $0.3 million compared to $0.9 million for the year ended December 31, 2016, resulting from the improving credit quality of the overall loan portfolio combined with the resolution of nonperforming loans.

Noninterest income for the year ended December 31, 2017 was $1.3 million compared to $1.6 million recorded for the year ended December 31, 2016, which included a $0.22 million gain on redemption of BOLI policy

For the year ended December 31, 2017, noninterest expense was $10.8 million, compared to $10.9 million for the same period in 2016. The primary contributors to the $0.1 million decrease in noninterest expenses were a decrease in data processing services, loan collection costs, partially offset by an increase in occupancy and equipment expenses, legal and professional fees, advertising and marketing expenses, and telephone costs.

Glen Burnie Bancorp Information

Glen Burnie Bancorp is a bank holding company headquartered in Glen Burnie, Maryland. Founded in 1949, The Bank of Glen Burnie is a locally-owned community bank with 8 branch offices serving Anne Arundel County. The Bank is engaged in the commercial and retail banking business including the acceptance of demand and time deposits, and the origination of loans to individuals, associations, partnerships and corporations. The Banks real estate financing consists of residential first and second mortgage loans, home equity lines of credit and commercial mortgage loans. The Bank also originates automobile loans through arrangements with local automobile dealers. Additional information is available at www.thebankofglenburnie.com.

Forward-Looking Statements

The statements contained herein that are not historical financial information, may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties, which could cause the companys actual results in the future to differ materially from its historical results and those presently anticipated or projected. These statements are evidenced by terms such as anticipate, estimate, should, expect, believe, intend, and similar expressions. Although these statements reflect managements good faith beliefs and projections, they are not guarantees of future performance and they may not prove true. For a more complete discussion of these and other risk factors, please see the companys reports filed with the Securities and Exchange Commission.